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Tax treatment of income distribution
FORTRESS INCOME FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2009/016487/06)
JSE share codes: FFA ISIN: ZAE000141313
FFB ISIN: ZAE000141321
(Approved as a REIT by the JSE)
(“Fortress” or “the company”)
TAX TREATMENT OF INCOME DISTRIBUTION
Linked unitholders are referred to Fortress’ preliminary summarised audited consolidated financial statements
for the year ended 30 June 2014, published on SENS on 12 August 2014, wherein linked unitholders were
advised of distributions no. 10 of 58,81 cents per A linked unit and 24,39 cents per B linked unit for the six
months ended 30 June 2014 (“the distribution”).
In accordance with Fortress’ status as a REIT, linked unitholders are advised that the distribution meets the
requirements of a “qualifying distribution” for the purposes of section 25BB of the Income Tax Act, No. 58 of
1962 (“Income Tax Act”). The distribution will be deemed to be a dividend for South African tax purposes, in
terms of section 25BB of the Income Tax Act.
The distribution received by or accrued to South African tax residents must be included in the gross income of
such unitholders and will not be exempt from income tax (in terms of the exclusion to the general dividend
exemption, contained in paragraph (aa) of section 10(1)(k)(i) of the Income Tax Act) because it is a dividend
distributed by a REIT. This distribution is, however, exempt from dividend withholding tax in the hands of
South African tax resident unitholders, provided that the South African resident unitholders provide the
following forms to their Central Securities Depository Participant (“CSDP”) or broker, as the case may be, in
respect of uncertificated units, or Fortress, in respect of certificated units:
a) a declaration that the distribution is exempt from dividends tax; and
b) a written undertaking to inform the CSDP, broker or Fortress, as the case may be, should the
circumstances affecting the exemption change or the beneficial owner cease to be the beneficial owner,
both in the form prescribed by the Commissioner for the South African Revenue Service. Linked
unitholders are advised to contact their CSDP, broker or Fortress, as the case may be, to arrange for the
abovementioned documents to be submitted prior to payment of the distribution, if such documents have not
already been submitted.
Distributions received by non-resident unitholders will not be taxable as income and instead will be treated as an
ordinary dividend which is exempt from income tax in terms of the general dividend exemption in section
10(1)(k)(i) of the Income Tax Act. It should be noted that up to 31 December 2013 distributions received by
non-residents from a REIT were not subject to dividend withholding tax. From 1 January 2014, any distribution
received by a non-resident from a REIT will be subject to dividend withholding tax at 15%, unless the rate is
reduced in terms of any applicable agreement for the avoidance of double taxation (“DTA”) between South
Africa and the country of residence of the unitholder. Assuming dividend withholding tax will be withheld at a
rate of 15%, the net distribution amount due to non-resident unitholders is 49,9885 cents per A linked unit and
20,7315 cents per B linked unit. A reduced dividend withholding rate in terms of the applicable DTA may only
be relied on if the non-resident unitholder has provided the following forms to their CSDP or broker, as the case
may be, in respect of uncertificated units, or Fortress, in respect of certificated units:
a) a declaration that the distribution is subject to a reduced rate as a result of the application of a DTA; and
b) a written undertaking to inform their CSDP, broker or Fortress, as the case may be, should the
circumstances affecting the reduced rate change or the beneficial owner cease to be the beneficial
owner,
both in the form prescribed by the Commissioner for the South African Revenue Service. Non-resident
unitholders are advised to contact their CSDP, broker or Fortress, as the case may be, to arrange for the
abovementioned documents to be submitted prior to payment of the distribution if such documents have not
already been submitted, if applicable.
The distribution is payable to Fortress linked unitholders in accordance with the timetable set out below:
2014
Last date to trade cum distribution: Friday, 29 August
Linked units trade ex distribution: Monday, 1 September
Record date: Friday, 5 September
Payment date: Monday, 8 September
Linked unit certificates may not be dematerialised or rematerialised between Monday, 1 September 2014 and
Friday, 5 September 2014, both days inclusive.
Payment of the distribution will be made to linked unitholders on Monday, 8 September 2014. In respect of
dematerialised linked units, the distribution will be transferred to the CSDP accounts/broker accounts on
Monday, 8 September 2014. Certificated linked unitholders’ distribution payments will be posted on or about
Monday, 8 September 2014.
A linked units in issue at the date of declaration of the distribution: 424 290 288
B linked units in issue at the date of declaration of the distribution: 424 290 288
Fortress’ income tax reference number: 9218846179
12 August 2014
Sponsor
Java Capital
Date: 12/08/2014 04:22:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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